FAFSA changes are being incorporated for upcoming college students. In the past, students had to wait until Jan 1. to turn in their Free Application for Federal Student Aid (FAFSA). Although, the Department of Education (DOE) announced in July that students can now turn in their application on Oct 1. 2016. This means students can apply three months earlier.
In addition, the FAFSA will now determine student aid based on the family income for two years before starting college. If the student starts college in the fall of 2017, they would use their parents’ 2015 tax return. This ends the confusion of using the family’s tax return from the previous year since the applications were due on Jan. 1, and taxes don’t have to be filed until April 18.
Moreover, the new rules will help to get a quicker approval. Around one-third of applications are selected for verification. This is where prospective students are asked to submit additional information to support their application.
Since tax data will be taken from two years prior to the application, many of the questions can be filled automatically from the IRS. This will be executed through the IRS Data Retrieval Tool. Mark Kantrowitz, a publisher at Cappex (a free website that connects students with financial aid), said “This will benefit low-income students who often have trouble completing verification because there can be challenges like getting their parents to provide the info twice. I think we’ll see some improvements in who completes the FAFSA, who gets to enroll in college and who graduates.”
Furthermore, students will know how much they can get before enrollment. Kantrowitz went on to say, “Previously, a student would get into a college, but wouldn’t know if they could afford to go. Now, by the time a college decides to admit a student early, they will know everything they need to know in order to assemble a financial aid package.” Since many institutions incorporate a May 1 response deadline, students will have more data to help them make informed decisions. Of course, students still have to apply every year. This is because changes in income or more family members in college can affect the award.
Moreover, if a family is planning to sell of stocks–it won’t count as income on the FAFSA’s tax return information if they are sold before Jan. 1 of the student’s sophomore year of college. There is also the benefit of filing early, as those who file in the first three months often get more grant money than those who file later.
According to ThinkAdvisor, Ninety percent of those intending to apply for aid said they would like financial aid awards earlier than the historical March award letter delivery, with 41% saying they would like to receive their firm financial aid award in the fall semester of their senior year. In addition, Seventy-seven percent of enrollment professionals said they planned to deliver their financial aid awards earlier than in previous years. It is an interesting and refreshing update to the financial aid process, and it is yet to be seen if these changes create a positive impact.